Yum! Brands

Yum! Brands, Inc.
Formerly called
 Tricon Global Restaurants
Public
Traded as NYSE: YUM
S&P 500 Component
Industry Restaurants
Founded 1997
Headquarters Louisville, Kentucky, U.S.
Area served
 Worldwide
Key people
Revenue Decrease US$13.105 billion (2015)[1]
Increase US$1.921 billion (2015)[1]
Increase US$1.293 billion (2015)[1]
Total assets
  • Decrease US$ 8.075 billion (2015) [1]
Total equity Decrease US$ 969 million (2015)[1]
Number of employees
 Approximately 505,000 (as of December 2015)[1]
Divisions China, India
Subsidiaries
Website www.yum.com

Yum! Brands, Inc., or Yum! and formerly Tricon Global Restaurants, Inc., is an American fast food company. A Fortune 500 corporation, Yum operates the licensed brands Taco Bell, KFC, Pizza Hut, and WingStreet worldwide. Prior to 2011, Yum! also owned Long John Silver's and A&W Restaurants.

Based in Louisville, Kentucky, it is one of the world's largest fast food restaurant companies in terms of system units—with 42,692 restaurants (including 8,927 that are company-owned, 796 that are unconsolidated affiliates, 30,930 that are franchised, and 2,039 that are licensed) around the world in over 130 countries.[1] In 2015, Yum!'s global sales totaled US$13.105 billion.

History

Tricon Global Restaurants

Yum! was created on May 30, 1997, as Tricon Global Restaurants, Inc. from PepsiCo's fast food division as the parent corporation of KFC, Pizza Hut and Taco Bell restaurant companies.[2][3] Tricon Global was spun out in late 1997. Tricon selected Louisville, Kentucky, as its headquarters moving near the KFC Restaurant Support Center from the Pepsi HQ in Purchase, New York, by early 1998.[3]

Tricon Global in 2000 agreed to test multi-branded locations with Yorkshire Global Restaurants. By March 2002, the Tricon-Yorkshire multibranding test consisted of 83 KFC/A&Ws, six KFC/Long John Silver's and three Taco Bell/Long John Silver's and was considered successful by the companies.[4]

In 2001, KFC started a test in Austin, Texas, restaurants of "Wing Works" chicken wing line sold with one of a few flavored sauces. Also, KFC hired a consultant to develop a breakfast menu.[5]

Yum! Brands

In March 2002, Tricon announced the acquisition of Lexington, Kentucky-based Yorkshire Global Restaurants, owner of the Long John Silver's and A&W Restaurants[6] chains and its intention to change the company's name to Yum! Brands, Inc. On May 16, 2002, the name change became effective after a vote during the company's annual shareholders meeting, and on June 17, 2002, Yum! executed a two-for-one stock split. Shortly afterwards, due to Yum!'s lifetime contract with Pepsi, Long John Silver's and A&W Restaurants (both of which previously served Coca-Cola products) began gradually switching to Pepsi products, with A&W Restaurants retaining A&W Root Beer from a separate deal with Dr Pepper/Seven Up (now Dr Pepper Snapple Group).

In 2002, Yum began testing co-branding locations pairing Pizza Hut with Pasta Bravo, Back Yard Burgers and A&W.[7] The Pasta Bravo concept was acquired in 2003 from Pasta Bravo, Inc. of Aliso Viejo, California for $5 million to pair with Pizza Hut.[8]

In 2003, Yum! launched WingStreet as a hybrid combo unit with an existing Pizza Hut franchise.[9] In 2007 and 2008, a thousand WingStreet stores a year were opened. On October 19, 2009, Company president Scott Bergren publicize WingStreet's national launch.[9]

An East Dawning test cafeteria-style restaurant was opened in Shanghai in 2004. After initially failing, Yum! Brands chose the KFC business model (KFC is the most successful Western chain in China) and found greater success.[10] As of September 30, 2007, eight East Dawning restaurants were in operation.[11]

International focus

A single Yum! restaurant facility co-branded as Taco Bell and KFC in San Francisco, California
Another cobranded KFC and Taco Bell in Oscoda, Michigan

In January 2011, Yum! announced its intentions to divest itself of its Long John Silver's and A&W brands to focus on its core brands of KFC, Pizza Hut and Taco Bell. For the decade leading up to the company's announcement, major growth had relied on international expansion. With little presence outside North America, the two chains no longer fit in the company's long-term growth plans.[12] The foreign expansion—particularly that of Taco Bell, KFC and Pizza Hut—was cited in the firm's January 18, 2011, announcement of its intention to sell the A&W and Long John Silver's chains. Both of those chains also suffered from poor sales, and had fewer locations compared to the other chains in the Yum! Brands portfolio. In September 2011, Yum! announced they had found buyers for the A&W and LJS chains. A Great American Brand will buy A&W, and LJS will be acquired by LJS Partners LLC.[6]

In May 2011, Yum! agreed to purchase Chinese hot pot chain Little Sheep for HK$4.56 billion.[13] The deal spent more than 4 months in anti-trust review by the Chinese Ministry of Commerce, to determine whether or not the transaction would result in a monopolistic positioning of Yum! in the country's restaurant industry. The Ministry approved the deal in November 2011, according to Little Sheep representatives.[14]

In 2012, a KFC opened in Ramallah and became the first American fast food restaurant to operate in the West Bank; a Pizza Hut is also planned.[15]

In 2013, a few KFC locations in China supplied chicken found to contain "excess levels of chemical residue". Yum! has lost 6% of sales from publicity in China as of January 25.[16]

The company opened its first restaurant in Ulaanbaatar, Mongolia, in May, 2013. For Mongolia, KFC is the first western fast food to open its doors in the country. The company is planning to open 15 more restaurants in Ulaanbaatar in the next 5 years, including the country's first drive-thru service.[17] Yum Brands has also opened Taco Bell and Pizza Hut restaurants in newer Target stores.

Yum! Brands opened its 40,000th store in Calangute, Goa, India in October 2013.[18]

In 2013, its KFC subsidiary opened a fast casual version, KFC eleven, test location in Louisville, Ky, on Bardstown Road.[19] In the third quarter of 2013, Yum! Brands had to book an impairment of the goodwill resulting from the takeover of Little Sheep in 2011 in the amount of $222 million, which reduced profits for 2013.[20]

In 2014, Yum launched a number of additional restaurant test concepts, Super Chix, U.S. Taco Co. and Banh Shop.[21] Yum opened Super Chix in Central Arlington, Texas that is similar in format to Chick-fil-A on April 9, 2014.[22] In the summer of 2014, Yum's Taco Bell subsidiary launched its U.S. Taco Co and Urban Tap Room fast-casual taco concept restaurant in Huntington Beach, California, to take on fast casual restaurants like Chipotle and Panera.[23]

In the first quarter of 2015, Third Point Management and Corvex Management separately acquired an unspecified stake in the company.[24] The sole KFC Eleven was closed in April 2015.[19] A second Chix unit opened in May 2015 with additional menu items. Super Chix was sold to founder Nick Ouimet and an investment group in August 2015.[21]

Corporate

The KFC Yum! Center, Louisville's largest arena

The current executive chairman of Yum! Brands is David C. Novak.[25] Novak became CEO of predecessor firm Tricon Global on January 1, 2000, and chairman of the board on January 1, 2001.[26] Greg Creed replaced Novak in his role as CEO on January 1, 2015.[27] At the AGM in May 2016, Robert D. Walter became non-executive chairman.

On October 20, 2015, Yum! Brands, Inc., announced that it intends to separate into two independent, publicly traded companies. Yum! China will be spun off during 2016.[28]

Since 2006, Yum! Brands has served as the corporate sponsor of the Kentucky Derby.[29]

Brands

Current

Former

See also

References

  1. 1 2 3 4 5 6 7 "Yum! Brands, Annual Report 2015" (PDF). yum.com. Retrieved 2016-04-17.
  2. ↑ "Yum! Brands Inc (YUM) Company Profile". Reuters.com. Reuters. Retrieved 2014-10-03.
  3. 1 2 Johnson, Greg (August 1, 1997). "Taco Bell's Parent to Be Based in Louisville, Ky.". Los Angeles Times. Retrieved November 9, 2015.
  4. ↑ "Tricon Global Restaurants announced it has signed a definitive agreement to acquire Long John Silver's and A&W All American Food Restaurants, owned by Yorkshire Global Restaurants" (Press release). Tricon Global Restaurants. Bison.com. March 2002. Retrieved November 9, 2015.
  5. ↑ "KFC taps 'Seinfeld' star, starts 'Wing Works' test". Nation's Restaurant News. Lebhar-Friedman. August 6, 2001. Retrieved 2011-01-26.
  6. 1 2 3 4 "Yum Sells 2 Fast-Food Chains". New York Times. 2011-09-22.
  7. ↑ "Pizza Hut, Pasta Bravo Test Co-Branding". Entrepreneur. Nation's Restaurant News. August 6, 2002. Retrieved November 10, 2015.
  8. ↑ "Yum buys Pasta Bravo rights for P. Hut pairings". Nation's Restaurant News. Lebhar-Friedman. April 14, 2003. Retrieved 2011-01-26.
  9. 1 2 3 Cyrek, Christopher (October 20, 2009). "Pizza Hut going after wings market". Dallas Business Journal. Dallas, Texas: American City Business Journals, Inc. Retrieved 2011-01-26.
  10. 1 2 Adamy, J. (2006-10-20). "One U.S. Chain's Unlikely Goal: Pitching Chinese Food in China". The Wall Street Journal.
  11. ↑ "Yum! Brands - Defining Global Company that Feeds the World".
  12. ↑ "Yum puts A&W, Long John Silver's up for sale". MSNBC. Associated Press. 18 January 2011. Retrieved 20 January 2011.
  13. ↑ Jin, Tony (October 27, 2011). "Uncertainty Surfaces Over Yum's Takeover of Little Sheep". China Perspective. Retrieved November 11, 2015.
  14. 1 2 Guang, Yin (November 8, 2011). "China Corporate News: Yum's Little Sheep Takeover Review Cleared". China Perspective. Retrieved November 11, 2015.
  15. ↑ American fried chicken comes to the Palestinian territories, Los Angeles Times, 04-02-2012, access date 20-02-2012
  16. ↑ "Yum Brands' chicken in China contained excessive chemical levels, report says". Business First. 25 January 2013. Retrieved 26 January 2013.
  17. ↑ "Yum! Brands expands to Mongolia, plans more growth". Business First. 29 May 2013. Retrieved 30 May 2013.
  18. ↑ Narayan, Adi (October 23, 2013). "Yum to Invest $10 Billion With Partners in Emerging Markets Push". Bloomberg. Retrieved 19 November 2013.
  19. 1 2 Elson, Martha (April 29, 2015). ""What now?" after Highlands KFC eleven closes". Courier-Journal. Gannett. Retrieved November 11, 2015.
  20. ↑ Hoang, Anh (26 October 2013). "Should Investors Worry About Yum! Brands' Sluggish Third Quarter Results?". The Motley Fool. Archived from the original on 10 August 2016. Retrieved 10 August 2016.
  21. 1 2 3 4 Ruggless, Ron (August 14, 2015). "Super Chix founder, investors buy concept from Yum". Nation's Restaurant News. Penton Restaurant Group. Retrieved November 11, 2015.
  22. ↑ Daniels, Lauren Drewes (April 10, 2014). "The First Super Chix, a Fast-Food Chicken Joint from KFC's Owners, Opens in Arlington". Dallas Observer. Retrieved November 10, 2015.
  23. ↑ Dockterman, Eliana (April 24, 2014). "Taco Bell for Foodies". Time. Time Inc. Retrieved November 11, 2015.
  24. ↑ Herbst-Bayliss, Svea (May 1, 2015). "Third Point takes stake in Yum! Brands, stock climbs". Reuter. Thomson Reuters. Retrieved November 11, 2015.
  25. ↑ "Yum! Brands, Form 8-K, Current Report, Filing Date Feb 10, 2000". secdatabase.com. Retrieved Feb 16, 2013.
  26. ↑ "Yum! Brands, Form 10-K, Annual Report, Filing Date Mar 28, 2001" (PDF). secdatabase.com. Retrieved Feb 16, 2013.
  27. ↑ "Yum! Brands - Defining Global Company that Feeds the World".
  28. ↑ "Yum!Brands announced that it intends to separate into two independent, publicly-traded companies." Company news release, October 20, 2015.
  29. ↑ "Kentucky Derby including Yum Brands in its name - May. 5, 2006".
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